Foreign Minister Penny Wong has spoken out after high‑stakes peace talks between the United States and Iran collapsed without a deal, warning that any escalation would deepen the human toll of the conflict and rattle the global economy. 

Wong expressed disappointment after marathon negotiations in Islamabad ended without agreement, calling on both sides to maintain the ceasefire and urgently return to the negotiating table. 

'It is disappointing that the Islamabad talks between the United States and Iran have ended without agreement,' Wong said in a statement on Sunday afternoon. 

'The priority now must be to continue the ceasefire and return to negotiations. We continue to want to see a swift resolution to this conflict.'

She warned that renewed hostilities would come at a severe cost.

'Any escalation in the conflict would impose an even greater human cost and further impact the global economy,' she said.

The comments came after US Vice President JD Vance revealed that Iran had walked away from a potential deal despite 21 hours of gruelling talks described as historic.

'We've been at it now for 21 hours. We've had a number of substantive discussions with the Iranians. That's the good news,' Vance told reporters at the Serena Hotel in Islamabad, Pakistan.

'The bad news is that we have not reached an agreement, and I think that's bad news for Iran much more than it's bad news for the United States of America.

'So we go back to the United States having not come to an agreement.'

Negotiations appeared to conclude while US President Donald Trump attended a UFC event in Miami alongside his family and Secretary of State Marco Rubio, a stark contrast to the tense diplomatic deadlock unfolding overseas.

Vance declined to spell out every detail of the negotiations but said Iran's refusal to commit to abandoning its nuclear ambitions proved to be a sticking point.

Prime Minister Anthony Albanese reiterated calls for peace on Friday, describing the two week ceasefire as a significant but fragile step forward.

'We want to say this is an important step forward. Of course it is a fragile peace, but we want it to lead to an agreement,' Albanese said.

He stressed that Australia believes any progress must extend beyond the immediate conflict. 

'The Australian government firmly believes this has to apply to Lebanon as well. We want to see peace in this region and it will make a difference,' he said.

Albanese acknowledged growing concern at home, adding that he knew 'many Australians are concerned about the events that are occurring in Lebanon.'

Albanese has previously spoken out against the United States' approach to Iran, criticising President Donald Trump's inflammatory rhetoric amid rising tensions.

The Prime Minister took aim at Trump's social media posts warning that a 'whole civilisation will die tonight' if Tehran failed to engage in talks before the ceasefire was agreed to on Thursday, arguing the language was reckless and unhelpful. 

'I don't think it's appropriate to use language such as that from the president of the United States, and I think it will cause some concern,' he told Sky News. 

'The potential damage to civilian infrastructure in Iran was an extraordinary statement, and the impact that would have arisen from an escalation in the Iranian response would have led to greater economic damage,' he said.